Friday, September 23, 2011

What I Have Learned About Medicare Supplement Programs

How many people took Operations Research in college? Who remembers how to set up a system of simultaneous equations and solve for min/max? I remember doing it, but not exactly how. Deciding on a medigap vs. medicare advantage vs. a straight up drug plan vs. the former employer's really expensive gold plated supplement is starting to feel like solving a system of equations.
If you, gentle reader, are approaching 65, I can not recommend strongly enough that you start examining your options ahead of time. Perhaps I am the only procrastinator on the planet, but Jim and I left it a little late.
First, know that Medicare does not pay for everything. Often, a supplemental policy of some sort is financially prudent.

Here is what we think we know so far.
  • You have a 6 month window after turning 65 during which you can buy a medigap policy with no underwriting (this means looking at your medical history to determine if you're well enough to insure).
  • You have a 3 month window after turning 65 to do something about Part D, which is drug coverage. Failure to do this will result in fines, and I think a life long increased cost to have Part D.
  • Medicare advantage programs are basically Medicare Part C. They have low monthly premiums (Humana offers 2, one is $24, the other is $36). They pay a little more on top of what Medicare pays, but they limit your yearly out of pocket costs to $3 or $4k. They include drug coverage, with copays. They also have some vision and dental which Medicare doesn't. If you do not see the doctor often, this may be a good option. There will be co-pays for some services. Both PPO and HMO plans are available. Due to our moving about, we have to have PPO.
  • Medigap policies are named A - F (or L or something). Plan F is a Plan F is a Plan F. So go for the lowest cost, highest rated carrier. At present this would be Mutual of Omaha. They charge $103 a month, and pay all ( I think ) the deductibles, and there are no copays.
  • Drug benefits are extra if you have a medigap policy. The coverage plan you select depends on what meds you are taking. Each plan has its own formulary and rate schedule.
  • Neither Medicare advantage plans nor purchased drug coverage protect you from the donut hole. When the amount of money you paid (including your deductible if you have one) and your insurer paid for your drugs hits $2840, you're in the hole. You stay there until your TROOP (true out of pocket) hits $4550. Then money flows your way once again. I am still fuzzy on the math that gets you to the $2840. I think it's important to know the retail cost for a non-generic that the plan you are considering has negotiated with the pharmacies, I think that's the largest factor in the events driving you to the edge of the donut.
  • All plans are local. You have to get something that is offered in your zip code. If you move, rates will probably change. Some states have more plans than other states. We're SD residents, and we appear not to have so many options.
  • There are many brokers on the web. Some only broker medigap, some broker medigap and medicare advantage plans. Be aware of what they're selling, because that will determine what they tell you about.
  • AARP offers plans underwritten by United Health care. They are different in that they don't start significant questions about your health until you've been on medicare for 3 years.
  • Everything changes every year. Every dang year you will have to revisit your plan to make sure your non-generics are still covered and that they didn't move into a more expensive tier. There is no fire and forget.
  • Changes must be made during the open enrollment periods which are generally Octoberish to early Decemberish.
I'm writing this to synopsize what I think I know, and to point out that this is something that will not be accomplished over a couple of days. As I said, I may be the only person on the planet who did not realize how time consuming this is, but I didn't. Now you do.
Having only ever worked for one employer, who provided gold plated coverage, I never had to know any of this stuff. They provided it, I used it. This has been a very enlightening experience for us.
Nothing in this post can be taken as being accurate. This is what I think I know, which might be totally wrong, so do your own research.

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